No advisory for foreign property deals: Firm fined

For not adequately warning buyers about the risk of foreign deals, property agency Square Yards Singapore has been fined $7,500.

This was after an investor lost more than $48,000 buying a property in the United States that was marketed by the firm.

The disciplinary committee of the Council for Estate Agencies (CEA) also imposed a condition on Square Yards' licence: It cannot market or transact in any foreign property for six months from March.

In a statement yesterday, the CEA said Square Yards had breached practice guidelines on the marketing of foreign properties by not providing a written advisory message on the risks involved in buying such properties.

In August 2014, Square Yards and US developer North Dakota Developments held a seminar here to promote the Transhudson Hotel in the city of Parshall in North Dakota. After the seminar, an investor bought a unit for US$74,950 via Square Yards. He made partial payment of US$33,982.50 (S$48,500).

Investigations revealed Square Yards had facilitated the sale of two other units by the same developer.

But in May 2015, the US Securities and Exchange Commission charged North Dakota Developments with allegedly fraudulently raising over US$62 million from investors worldwide through selling projects such as the Transhudson.

In total, the three Singapore investors paid US$112,279.50 to the US firm. They have not recovered any amount of the total sum.

In sentencing Square Yards, the CEA committee took into consideration charges relating to the other two investors.

The CEA advised buyers to exercise due diligence regarding foreign properties: "They should not rely solely on the advice from representatives of the foreign developer."

Square Yards' key executive officer Shermaine Wai apologised to the investors, saying the firm had "no intention at all" of abetting fraud. After the incident, the firm began including a written advisory in the sign-offs of all its e-mails.

A version of this article appeared in the print edition of The Straits Times on January 20, 2017, with the headline 'No advisory for foreign property deals: Firm fined'. Print Edition | Subscribe